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  • Market Signal: Proceed with Caution [View article]
    In addition to the good and bad signs for the market I mentioned upstream, you have a pretty reliable sentiment indicator giving a pretty clear signal right now. This is the put/call options ratio charted as $CPC. If you look at SharpCharts' version of this on a 6 month chart, you can draw a circle around the extreme moves down (bullish sentiment) and you have these dates circled:

    1. August 2 and 27
    2. September 21 and 25
    3. October 20 and 29
    4. November 24 and December 22

    Then looking at the S&P 500 chart, you see that each of these pairs was right in front of a market dive, ideal short points. This would suggest that a dive is imminent. It also agrees with the prevalent sentiment you hear about the direction being up to start the new year and the fact that prevalent sentiment is usually wrong.

    But sentiment is actually right now and then, and it agrees with some technicals, so we are in a dry-powder zone.
    Dec 31 11:30 am |Rating: 0 0
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